Germany insists all of EU must pay for Greece bailout

'Cameron and Osborne have often said that the UK won’t participate in the rescue of a eurozone member state,' a European commission official has said. 'But it cannot veto this.' Photograph: Ray Tang/Rex Features

The Cameron government's deep reluctance to commit UK taxpayers' money to preventing a European insolvency is being tested by German insistence that all of the EU has to come to the rescue of Greece.

With European governments embroiled in a fierce dispute over how to structure a second bailout of Greece to forestall the first sovereign default in the 17-country single currency zone, Britain is keen to remain on the sidelines, insisting that Greece is purely a eurozone problem.

But on Tuesday night in Brussels, German officials told a meeting of EU finance ministers that all 27 EU countries had to contribute to the proposed bailout, according to a senior European diplomat. The government is resisting fiercely, claiming French support for its position.

"We do not want to be part of any second European assistance package for Greece. And no such proposal has been made," a Treasury spokeswoman said last night.

But the proposal came last week from the German parliament in a statement buttressing Berlin's negotiating position over the terms for the second European bailout of Greece in a year.

It said that a European commission-administered fund running to €60bn, to which Britain contributes, had to be involved. Most of the money pledged to Greece, Ireland, and Portugal has come from guarantees by governments of the 17 countries of the eurozone. Britain was involved in the Irish and Portuguese bailouts, but not in the initial €110bn rescue of Greece a year ago, which has now failed.

An emergency meeting of European finance ministers in Brussels on Tuesday evening failed to agree on a new Greek rescue. It was also gridlocked, diplomats said, on the issue of who should contribute.

"Cameron and Osborne have often said that the UK won't participate in any way in the rescue of a eurozone member state," said a European commission official. "But it cannot veto this."

Any decision on whether the European commission fund would be used to help Greece would be taken by a qualified majority vote among EU finance ministers, meaning that Britain would not be able to block a decision obliging it to contribute.

The issue could come to a head as early as next week when EU finance ministers meet in Luxembourg to wrestle with what to do about the spiralling Greek crisis.

"There is no decision yet. A lot of discussion. But the German parliament statement is very influential," said another commission official.

The €750bn bailout fund set up last year comprises €440bn in loan guarantees from the governments of the eurozone, €250bn from the IMF, and €60bn from the entire EU in the form of commission borrowing against the EU budget. Britain is liable for part of that third plank.